KWG V-P blames province for stalling Ring of Fire development

By:
Jonathan Migneault

Moe Lavigne, vice-president of exploration and development with KWG Resources, said the provincial government needs to take the lead on infrastructure in the Ring of Fire so companies can proceed with development.

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The province was “blinded” by
Cliffs Natural Resources' promises to invest in the Ring of Fire to
the detriment of the project's development, said Moe Lavigne, KWG
Resources' vice-president of exploration and development.

“At least from the provincial point
of view, they were enamoured with Cliffs, and the fact Cliffs had
$3.5 billion in their pockets ready to invest, and they shuttered out
everything else,” Lavigne said at a Sudbury Chamber of Commerce
event, April 3. “Now that has blown up.”

In 2009, the Toronto-based junior miner
began staking mining claims in the Ring of Fire for a future railroad
from its isolated Big Daddy chromite deposit in the James Bay
lowlands, heading south for 328 kilometres to a point on the Canadian
National Railway's main line, just west of the village of Nakina in
northwestern Ontario.

Both KWG and the Ohio mining giant were
development partners in the Ring at one time, but had a falling out.
Later, when Cliffs approached KWG to gain access to its
transportation corridor, KWG refused and the matter went to the
Ontario Mining and Lands Commissioner.

The tribunal ruled against Cliffs,
which later filed a court appeal, with a hearing scheduled June 16
and 17. The provincial government has requested to weigh in on the
appeal.

Lavigne did not pull his punches
against Queen’s Park, which he said has not done enough to support
development in the Ring of Fire.

“They don't understand there's
another way besides the project Cliffs presented to them,” he said.
“I don't know if they have the technical capacity to understand
what we're doing. I don't know if they understand mining strongly
enough to be able to make these decisions.”

Last November, Cliffs ceased work on
its $3.3-billion Black Thor mine and refinery project due to a number
of hurdles including the lack of a provincial infrastructure plan and
agreements with area First Nations.

But KWG and junior miner Noront
Resources have continued push forward with their Ring of Fire
projects.

Lavigne said for development to move
forward the province must invest in the necessary transportation
infrastructure.

“The problem with all those deposits
is that we simply can't go up there as a private corporation and
start building roads on Crown land,” he said. That takes
co-operation firstly from the First Nations, but it also takes
participation from the province.

“They really have to take the lead on
regional infrastructure. Private corporations don't do regional
infrastructure, they develop mines.”

The Wynne government recently announced
a framework agreement with the Matawa First Nations, a group of
Aboriginal communities closest to the string of chromite and base
metal deposits, in an effort to move forward with mineral and
community development in the remote region.

The development of a provincial
infrastructure plan has been contracted out to Deloitte Canada.

On the federal side, FedNor director
general Aime Dimatteo said last month that mining companies operating
in the Ring of Fire would have to make a business case for
development before the federal government makes any investment
decisions.

“At the end of the day, the
businesses will make the decisions on whether they're going to go
forward with these projects,” Dimatteo said.

Lavigne said KWG has made its business
case with a sustainable plan for rail and a more efficient refining
method to process the chromite.

“We don't want to build a fragile
industry that shuts down one year and opens the next year, and
creates chaos in the communities,” he said. “You've seen that
movie, and we don't want to do that.”

Through its own privately-financed
study, KWG has estimated a north-south railroad to their Ring of Fire
deposits would cost $1.55 billion to build, while a road along the
same route would cost $1.05 billion.

But the lower operational costs for a
rail line would bring a return on investment of the initial capital
expenditure within six years, Lavigne said. A road would cost $60.78
to transport a tonne of ore, while a rail line would cost $10.50.

“A railroad is the way to go,”
Lavigne said.

To refine chromite to make stainless
steel, KWG has filed a patent for a method to process the ore with a
natural gas-fired furnace instead of using electricity.

The technique, which introduces an
accelerant into the mix to process the ore at a lower temperature –
900 C instead of 1,600 C with an electric furnace – would free the
company from Ontario's high power rates and drastically reduce
greenhouse gas emissions, Lavigne said.

Gas furnaces have been used to process
iron ore, but the technique has never been used with chromite,
Lavigne said.

There are four natural gas furnaces
used to process iron-ore, and Lavigne said they could be used for
chromite after some modifications.